This Gold Slam is a Massive Wealth Transfer from Our Pockets to the Banks

I am very disappointed by, but not surprised at, the latest transfer of wealth to the bankers from everyone else.  The most recent gold bear raid has vastly enriched the bullion bankers, once again, at the expense of everyone trying to protect their wealth from global central bank money printing.

The central plank of Bernanke's magic recovery plan has been to get everybody back borrowing, spending, and "investing" in stocks, bonds, and other financial assets.  But not equally so, as he has been instrumental in distorting the landscape towards risk assets and away from safe harbors.

That's why a 2-year loan to the U.S. government will only net you 0.22%, a rate that is far below even the official rate of inflation.  In other words, loan the U.S. government $10,000,000 and you will receive just $22,000 per year for your efforts and lose wealth in the process because inflation reduced the value of your $10,000,000 by $130,000 per year.  After the two years is up, you are up $44,000 but out $260,000, for net loss of $216,000.

That wealth, or purchasing power, did not just vanish:  It was taken by the process of inflation and transferred to someone else.  But to whom did it go?  There's no easy answer for that, but the basic answer is that it went to those closest to the printing press.  It went to the government itself, which spent your $10,000,000 loan the instant you made it, and it went to the financiers who play the leveraged game of money who happen to be closest to the Fed's printing press.

This almost completely explains why the gap between the rich and everyone else is widening so rapidly, and why financiers now populate the top of every Forbes 400 list.  There is no mystery, just a process of wealth transfer of magnificent and historic proportions; one that has been repeated dozens of times throughout history.

This Gold Slam Was By and For the Bullion Banks

A while back, I noted to Adam that the gold slams that were first detected back in January were among the weakest I'd ever seen.  Back then I was seeing the usual pattern of late-night, thin-market futures dumping, which I had seen before in 2008 and 2011, two other periods when precious metals were slammed hard. 

The process is simple enough to understand; if you want to move the price down for any asset, your best results will happen in a thin market when there's not a lot of participation so that whatever volume you supply has a chance of wiping out whatever bids are sitting on the books.  It is in those dark hours that the market-makers just dump, preferably as fast as possible.

This is exactly what I saw repeatedly leading up to Friday's epic dump-fest.  The mainstream media (MSM), for its part, fully supports these practices by failing to even note them.  The CFTC has never once commented on the practice, and we all know that central banks support a well-contained precious metals (PM) price because they are actively trying to build confidence in their fiat money and rising PM prices serve to reduce confidence.

Here's a perfect example of the MSM in action, courtesy of the Financial Times:

Gold tumbles to two-year low

“There is no other way to put gold’s recent sell-off: nasty,” said Joni Teves, precious metals strategist at UBS in London, adding that gold would have to work to “rebuild trust” among investors.

Tom Kendall, precious metals analyst at Credit Suisse said “Once again gold investors are being reminded that the metal is not a very effective hedge against broad-based risk-off moves in the commodity markets.”

There are two things to note in these snippets.  The first is that the main ideas being promoted about gold are that it is no longer to be trusted and that somehow the recent move is a result of "risk off" decisions meaning, conversely, that there is increased trust in the larger financial markets that 'investors' are rotating towards.  Note that these ideas are exactly the sort of messages that central bankers quite desperately want to have conveyed.

The second observation is even more interesting, namely that the only people quoted work directly for the largest bullion banks in the world.  These are the very same outfits that stood to gain enormously if precious metals dropped in price.  Of course they are thrilled with the recent sell off.  They made billions.

In February, Credit Suisse 'predicted' that the gold market had peaked, SocGen said the end of the gold era was upon us, and recently Goldman Sachs told everyone to short the metal.

While that's somewhat interesting, you should first know that the largest bullion banks had amassed huge short positions in precious metals by January.

The CFTC rather coyly refers to the bullion banks simply as 'large traders,' but everyone knows that these are the bullion banks.  What we are seeing in that chart is that out of a range of commodities, the precious metals were the most heavily shorted, by far. 

So the timeline here is easy to follow.  The bullion banks:

  1. Amass a huge short position early in the game
  2. Begin telling everyone to go short (wink, wink) to get things moving along in the right direction by sowing doubt in the minds of the longs
  3. Begin testing the late night markets for depth by initiating mini raids (that also serve to let experienced traders know that there's an elephant or two in the room)
  4. Wait for the right moment and then open the floodgates to dump such an overwhelming amount of paper gold and silver into the market that lower prices are the only possible result
  5. Close their positions for massive gains and then act as if they had made a really prescient market call
  6. Await their big bonus checks and wash, rinse, repeat at a later date

While I am almost 100% certain that any decent investigation by the CFTC would reveal that market manipulating 'dumping' was happening, I am equally certain that no such investigation will occur.  That's because the point of such a maneuver by the bullion banks is designed to transfer as much wealth from 'out there' and towards the center, and the CFTC is there to protect the center's 'right' to do exactly that.

This all began on Friday April 12th, and one of the better summaries is provided by Ross Norman of Sharps Pixley, a London Bullion brokerage:

The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract (see below) in what proved to be only an opening shot. The selling took gold to the technically very important level of $1540 which was not only the low of 2012, it was also seen by many as the level which confirmed the ongoing bull run which dates back to 2000. In many traders minds it stood as a formidable support level... the line in the sand. 

Two hours later the initial selling, rumored to have been routed through Merrill Lynch's floor team, by a rather more significant blast when the floor was hit by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market - it had the hallmarks of a concerted 'short sale', which by driving prices sharply lower in a display of 'shock & awe' - would seek to gain further momentum by prompting others to also sell as their positions as they hit their maximum acceptable losses or so-called 'stopped-out' in market parlance - probably hidden the unimpeachable (?) $1540 level.

The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact. The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production - too much for the market to readily absorb, especially with sentiment weak following gold's non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data. The assault to the short side was essentially saying "you are long... and wrong".

(Source - originally found at ZeroHedge)

The areas circled represent the largest 'dumps' of paper gold contracts that I have ever seen.  To reiterate Ross's comments, there is no possible way to explain those except as a concerted effort to drive down the price.

To put this in context, if instead of gold, this were corn we were talking about, 128,000,000 tonnes of corn would have been sold during a similar 3-hour window, as that amount represents 15% of the world's yearly harvest.  And what would have happened to the price?  It would have been driven sharply lower, of course.  That's the point; such dumping is designed to accomplish lower prices, period, and that's the very definition of market manipulation.

For a closer-up look at this process, let's turn to Sunday night and with a resolution of about 1 second (the chart above is with 5 minute 'windows,' or candles, as they are called).  Here I want you to see that whoever is trading in the thin overnight market and is responsible for setting the prices cannot possibly be human.  Humans trade small numbers of contracts and in consistently random amounts.

Here's an example:

Note that the contracts' numbers, in the single digits to tens, are randomly distributed, and that the scale on the right tops out at 80, although no single second of trades breaks 20.

Now here are a few patterns that routinely erupted throughout the drops during Sunday night (yes, I was up very late watching it all):

These are just a few of the dozens of examples I captured over a single hour of trading before I lost interest in capturing any more.

As I was watching this and discussing it with Adam in real time, I knew that I was watching the sort of HFT/computer-trading robots that we've discussed here so much in the past.  They are perfectly designed to chew through bid structures, and that's what you see above.  They are 'digesting' all the orders that were still on the books for gold, to remove them so that lower and lower stops could be run.

Anybody who had orders up against these machines, perhaps with stops in place, or perhaps even while sleeping because this all happened in the hours around midnight EST, lost and lost big.

There is really no chance to stand against players this large with a determination to drive prices lower.  At the very least, I take the above evidence of computer-assisted declines of this magnitude to be a sign that our "markets" are completely broken and quite vulnerable to a crash.  That the authorities did not step in to halt these markets during such a volatile decline, when they have repeatedly stepped into other markets and individual equity shares on lesser declines, tells me much about the level of official support for such a decline.

It also tells me that things are speeding up, and the next decline in the equity or bond markets may happen a lot faster than anybody is expecting.

Unintended Consequences

If the intended consequences of this move were to enrich the bullion banks and to chase investors away from gold and other commodities and into stocks, what are the unintended consequences going to be?

While I cannot dispute that the bullion banks made out like bandits, I also wonder if perhaps, instead of signaling that the dollar is safer than gold, the banks did not unintentionally send the larger signal that deflation is gaining the upper hand.

With deflation, everything falls apart.  It is the most feared thing to the powers that be, and for good reason.  Without inflation and at least nominal GDP growth, if not real growth, then all of the various rescues and steadily growing piles of public debt will slump towards outright failure and possibly collapse.  The unintended consequence of dropping gold so powerfully is to signal that deflation is winning the day.

If this view is correct, then the current sell-off in gold, as well as in other commodities (detailed in Part II of this report), will simply be the trigger for a loss of both confidence and liquidity in the system, and that will not bode well for the larger economy or equities. 

In Part II: Protecting Your Wealth from Deflation, we explore the growing signs that the money-printing efforts of the central planners are seeing diminishing returns and are failing in their intended effect to kick global economic growth higher. Deflationary forces appear poised to take the upper hand here, sending asset prices lower potentially much lower across the board. 

If deflation indeed manages to break out from under the central banks' efforts to contain it, even if only for a short period, how bad will the ensuing wave of price instability be? How can one position for it? How extreme will the measures the central banks take in response be? And what impact will that have on asset prices, the dollar, and precious metals?

We are entering a new chapter in the unfolding of our economic emergency, one in which the risks to capital are greater than ever.  And the rules are increasingly being re-written to the disadvantage of us individuals.

The one unfair advantage we have is that history is very clear on how these periods of economic malfeasance end.  Let's exploit that as best we're able.

Click here to read Part II of this report (free executive summary; enrollment required for full access).

This is a companion discussion topic for the original entry at

So now that gold took a two-day drubbing for more than $225 and Dr. Martenson is warning of deflation, we should all expect to hear JAG crowing anytime now.

What's that saying about a broken clock?

You've made it clear from the beginning that the priorities are 1. Extinguish debt, 2. Invest in Resilliency/Homestead, 3. Finally, hold gold or silver/PM

If we follow the priority list, then the short-term fluctuations in PM shouldn't be an issue (assuming you hold PM at all). It seems to me that if anyone is thinking of selling their gold, then they are not holding it for the right reasons…oh, and thousands of years of tradition will not miraculously change now.

I would like to commend those who keep driving the home message of the first two on the priority list (that includes Chris and Adam, but also Wendy, Treebeard, and others). The first two have made the most immediate difference in my life.

Okay, we now need to shift our prayers to those who really lost today…those in Boston.

Be well, healthy, and safe!

[quote=earthwise]So now that gold took a two-day drubbing for more than $225 and Dr. Martenson is warning of deflation, we should all expect to hear JAG crowing anytime now.
What's that saying about a broken clock?
I actually agree that the gold price is manipulated but then again so are all financial markets.  The larger the market, the harder it is to manipulate, and the gold matket is not exactly a massive, silver even less so.  I even admit that gold is probably more manipulated than most markets, especially due to as Greenspan said in an earlier (more honest) life.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.
But lets be honest, anyone that bought and held gold in the past 2 years is down right now.  That is a little more than a broken clock being right twice a day.  I don't even understand why this causes such convulsions in some people.   Gold has gone up by nearly a factor of 7 in the past decade.  Why are people so freaked out that it can decline by 30%?  It can't go up like that forever.  This should indicate a buying opportunity in the near future. The problem I have with true goldbugs (I don't mean this as a pejorative because I am generally pro-gold and anti-state) is that there is really no way to have a rational argument with them.  If gold goes up, it confirms that they are correct.  If gold goes down, it must be a conspiracy.  Can someone that is a proper goldbug please explain to me what would have to change that would get them to rethink their beliefs?

I will break my question down into the simplest terms: 
As I understand it, the fundamental reason for buying and holding gold is as insurance against the possibility that the Central Banks will not be able to reign in the consequences of their policies. At what point does it become evident that the Central Banks will achieve their objectives*, without the anticipated consequences against which gold is an "insurance policy?" That old saying "Don't fight the Fed" rings quite true today.

*even if it is by hook or crook

You said,

If gold goes up, it confirms that they are correct.  If gold goes down, it must be a conspiracy.  Can someone that is a proper goldbug please explain to me what would have to change that would get them to rethink their beliefs?
Look,  If the Bernank speaks and says they might pull QE.. and Gold tanks.. then that is not a conspiracy.  It is just stupid players responding to FED jawboning.  If though, Japan is embarking on the largest (relative to GDP) QE ever, two big Gold and Silver mines have just closed, A Dutch bank has defaulted recently on their physical Gold holders.. Germany has to wait 7 years to get their rightfully owned 300 tons delivered from NY, Comex inventories have been falling precipitously, GLD share owners have been pulling out phys agressively since early 2013 and then Gold and Silver fall 20% in two days.... well... that just doesn't sit right with me.     

[quote=Jim H]Look,  If the Bernank speaks and says they might pull QE… and Gold tanks… then that is not a conspiracy.  It is just stupid players responding to FED jawboning.  If though, Japan is embarking on the largest (relative to GDP) QE ever, two big Gold and Silver mines have just closed, A Dutch bank has defaulted recently on their physical Gold holders… Germany has to wait 7 years to get their rightfully owned 300 tons delivered from NY, Comex inventories have been falling precipitously, GLD share owners have been pulling out phys agressively since early 2013 and then Gold and Silver fall 20% in two days… well… that just doesn't sit right with me.     
I agree that this move is suspicious.  By whos request was it going to take 7 years to repatriot the German gold?   To say that the Germans want it sooner and the FED does not have it seems like wild speculation.  As far as I know the Dutch bank did not "default" on their physical gold because they did not fail to deliver any gold that was requested.  What I thought they said was that going forward they will be out of the business of physical delivery.  Once again it seems a little strange but hardly conclusive.
My real question is while I agree that gold has a very long tradition of being money, what could be a game changer?  After all there was a time that horse power ruled the world, then came the internal combustion engine.  Is there anything that could move gold away from its traditional place as money and into more of a roll as just an asset?  My thinking is that computer technology might be that game changer.  What I hope is that we don't just get technology that is centrally planned and totalitarian in nature but that is a distinct possibility.
It seems to me that gold works best as money when trust is low in society.  Why give up work or goods for a money that is not trust worthy?  Because gold is desirable, portable, scarce, … it makes an ideal money in a low trust environment because I am not just getting a potentially worthless IOU, I am getting a valuable commodity as a placeholder for value.  Gold is like money with an embeded put option ( basically insurance against it going to zero ).  However in a higher trust environment, I can see how gold would be less necessary.  This is why local currencies seem to work well on a small scale but gold might be necessary for larger scale trade.  It certainly does not feel like we are moving towards a high trust environment but if we did come up with a more balanced, transparent, free market based money, I could see gold would be far less needed, and possibly not needed at all.
Jim, I know you are a big fan of bitcoin but I personally think something along the lines of Paul Grignon's Digital Coin would be far better.

Andrew Maguire proposed this reason for the takedown of gold on a King World Newsblog Interview today, at: . 

[quote] Gold and silver only have this type of selling when there are extreme shortages of the physical metal.  I am totally aware that before this takedown occurred there was an imminent LBMA default.

...We had already seen COMEX inventories plunging.  In 90 days COMEX inventories saw an incredible decline.  So immediately available physical gold was disappearing.  People around the world don’t understand what has been happening since Cyprus....Entities went to the LBMA and said, ‘We don’t trust anybody anymore.  We want our physical metal.’  They were told they would be cash settled instead by a bullion bank.  The Western governments have been trying to plug holes, and the reason for it has to do with the default that was taking place at the LBMA.


This is why this smash has been orchestrated because of the run that has been taking place on physical metal.  So Western governments had to do this because of an imminent run on the unallocated LBMA system.  The LBMA bullion banks had become so mismatched at one point on their trading positions vs real world demand that they had to orchestrate this smash. ” [/quote]



since his original "money as debt" series…  I watched the video and will have to digest a bit.  Perpetual coin does not seem much different than the role Gold plays in a Gold std. system… though it's not clear to me what the creation mechanism behind perpectual coin is.  I will have to investigate more… thanks.  

Don't panic. Just act as the bankers and buy NOW!

I'm going to attempt to explain what happened.  Since I wasn't "at the meeting" I have to use a certain amount of guesswork, and combine it with market experience, observations, and logic to arrive at a hopefully satisfactory endpoint.Three things are clear to me from observation:
a) deflation - the monetary kind - is happening in europe
b) deflation tends to drag down commodity prices overall
c) some really big, repeated, market-influencing actions were taken by one or more big players that ended up triggering a waterfall move down in PM.
First A - deflation in europe.  Banks in the eurozone are clearly reducing outstanding loans. This has been happening for 6 months, and results in a shrinkage of money & credit, which I call monetary deflation.
Second B - deflation - and also the expectation of deflation - tends to drag down commodity prices.  This is just what I've noticed happening.  Every time credit contracts, commodity complex prices in general drop.  Furthermore, the extensive use of leverage in the futures markets provides the explosive fuel for cascading large moves in either direction delivered via margin calls.
Third C - big, deliberate actions resulted in the waterfall move.  Its clear from both my observation and Chris's charts that some participant intentionally triggered this move.  No participant sells so repeatedly, and in such a manner without intending to influence market direction.  That said, no explicit conspiracy (i.e. timetables, plots hatched at the Fed, etc) need exist for this to occur.  All that is required is regulatory acquiescence to the operation.  Simple profit motive from successfully influencing the market at a sensitive juncture is motive enough.
Commodity weakness + government turning a blind eye + big players seeking profit = big short side move down.  Or it could all be a big plot.  Either could be true, but the overarching sneaky plot is not required.
Some things are also clear to me.  An all-powerful manipulative power is neither required for this to occur, nor is such a power likely to exist.  If such a power existed, there would have been no bull market in PM, since the power would simply intervene to set whatever price it wanted, whenever it wanted to.  That hasn't happened, therefore such a power is unlikely to exist.
My alternative explanation: some big players took advantage of inherent market weakness and pounded the market at a sensitive juncture, with the acquiescence of the regulators.  However, this cannot happen at any moment, only at certain times - such as times of deflation, when commodities are already being sold by the market at large and the number of buyers tends to dry up.  Likewise, planted news stories were apparently needed to "soften things up" along with bank announcements in order to make the market more amenable to the attack.  An all-powerful instrumentality would not need such silly tools, it would simply exercise its power and prices would move accordingly.
So why do we care?  What's the point of all this theorizing?
The point is to clearly understand on a more scientific basis what moves markets, so we can be emotionally & mentally prepared for things such as this when they occur.  Likewise, the more we understand and observe, the better we are able to predict times of possible danger.
Since gold is a commodity, and since commodities seem vulnerable to downward moves during deflationary pressures, it seems clear to me that monetary deflation opened the door for this assault.  Therefore, it would seem prudent for us to educate ourselves as to what monetary deflation is, how to detect when it is occuring, honestly report on it, and acknowledge that such deflation makes the market vulnerable to exactly this sort of big player action.
Additionally, it is probably intellectually imprudent to blame all downside moves in PM on an all-powerful instrumentality.  That sort of thinking invites us to throw up our hands in helpless rage and despair at our powerlessness rather than spending our energy on looking for causes that might allow us to spot the next one coming.
As an example to further drive this home, there are two possible approaches towards explaining and/or addressing a recent hypothetical earthquake:
a) "The All Powerful Rooster God Causes Earthquakes!  We must stop doing things that anger him!"  CHS calls this a Cargo Cult Mentality, which is not so useful in connecting cause with effect.
b) "I wonder if those tectonic plates moving might have anything to do with the quake we just had."  This of course is the more scientific approach, it allows us to - with enough investigative effort - delineate the shape and also limitations of the potential threat allowing us to prepare more effectively, and is clearly the approach I favor.

Seems too many fall into camp a), i.e., the religious camp and that's what I think we are seeing plastered all over this site. I, for one, regret to admit that I have been somewhat of a skeptical member of the congregation, but a member nonetheless. 

[quote=anexaminedlife]Seems too many fall into camp a), i.e., the religious camp and that's what I think we are seeing plastered all over this site. I, for one, regret to admit that I have been somewhat of a skeptical member of the congregation, but a member nonetheless. 
This being your third comment directed at this place being some sort of a cult or religious site indicates that you have missed the central point of the place almost entirely, which is to trust yourself.
However, it seems that your gut is telling you that you are too easily led astray, at least by this site,  and since it keeps surfacing for you, I have to ask why you don't just trust that instinct of yours and assume responsibility for your own life?
Yes, there is a point of view here, rather unabashedly too.  If you choose to consciously incorporate the thinking behind that view into your framework, excellent, but if not, then that's fine too.  What's not fine with me, however, is passive-aggressively attacking this site and its members as being somehow intellectually infirm because we all might share your tendency to slip unthinkingly into 'congregational mode.'
Besides being just a tad insulting, it offers nothing concrete to react to, nothing intellectual to refine or debate, and therefore is unhelpful.  It rather reminds me of a member that stormed off in a huff a while back be honest.
Our core philosophy here is to Trust Yourself.  If you want someone to follow and then blame when things don't turn out perfectly, this will continue to be a frustrating place.
I do promote gold heavily because I cannot find a rational, rigorous end-game to all this monetary printing besides an outcome that either shreds the financial system (deflation) or ends in a very bad round of inflation.  In either of those outcomes, having sound money is an answer that works, and one of my missions is to help people preserve their purchasing power.
For those actually interested in this point of view, here it is:
Fossil fuels are finite, and the easy stuff is gone.
The Fed's policies are faaaaar more likely to end in tears than smiles.
Each Fed "fix" has created a larger crisis later on…this time is probably no different, which means the next crisis will exceed any prior crisis.
A wide range of countries, municipalities, and states are insolvent as their liabilities far exceed their assets.
Living with a lower footprint and in more resilient ways is rewarding, fun, and worthy of my time and energy.
Humans are living on this planet in an unsustainable fashion…sooner or later they will have to make a pretty serious set of adjustments.
People generally don't make any changes until they are forced to…creating positive action out of insight requires constant focus on what's really happening out there.
Our governments lie to us constantly in the form of manipulated statistics…they have for a very long time, and it's safest to conclude that practice will continue.
Most of the mainstream media gets most complex issues pretty much wrong or badly out of context, and so, yes, being a bit skeptical of promising or overly frightening claims is actually a rather important skill set to build.
I don't pretend to know exactly what is going to happen or when, only that risks can be tracked and the risks of more disruptions in the future are quite high.
If you would care to point out which of those bullet points strikes you as a religious "belief" then that would be welcome, but only if you use facts, cite examples, and are willing to support your views.
And, as long as we've come this far, and for the record, and far from being the central theme of this site, gold is #3 on our basic advice list, which reads like this.
Get out of all debt that carries a high rate of interest.  A mortgage can make sense in this environment, but not credit card, student loan, or auto debt.
Invest in your homestead and self.  These investments have magnificent, practically guaranteed returns.  Insulation, air sealing, and solar hot water are examples, as is improving your soil with amendments and growing your own food.
Invest in physical gold. …a minimum of 10% but perhaps as high as 20%, depending on your situation.  Along with this have 3 months of living expense in cash out of the bank, somewhere safe.
Have money left over that needs to stay in the financial markets?  Great.  Please be sure to have it managed as safely and as carefully as possible.

You said,

Some things are also clear to me.  An all-powerful manipulative power is neither required for this to occur, nor is such a power likely to exist.  If such a power existed, there would have been no bull market in PM, since the power would simply intervene to set whatever price it wanted, whenever it wanted to.  That hasn't happened, therefore such a power is unlikely to exist.
This just seems naive to me....  The FED, the bankers (and bullion bankers) and the Gov't don't want precious metals to signal the sickness in their fiat money system.. hence they have every motivation, and certainly the "power" to manipulate the markets.  You have heard of them, right Dave???  The FED?  You know the saying, "Don't fight the FED"?  Do you know why people say that Dave? 

I consider the entire paragraph you wrote above as disinformation… propaganda Dave.  Certainly the power exists.  Certainly the CTFC has made if very clear that they will look the other way when obviously market moving positions are taken on by one or two entities.  You can write whatever you want… but I will nail you on it when you try to twist things like above.     

The longterm bull market in PM's is the result of supply vs. demand.  Even in a paper market like the Comex, deliveries must be made, so what we have seen is a managed ascent.  The bullion bankers have used very trick in the book to try to contain this bull market, and the current tightness and problems show the extent to which they have run out of real Gold to play their games… .even after stripping the GLD, even after leasing so much Gold from sovereigns, even after raiding allocated accounts… even after stealing the MF Global account holders Gold… there still is not enough real Gold to keep their suppression games going.   

You also said,

Since gold is a commodity, and since commodities seem vulnerable to downward moves during deflationary pressures, it seems clear to me that monetary deflation opened the door for this assault.
Chris made it very clear in his essay that he does not view Gold as a commodity.  I don't either.  Certainly the money printers would like it to be so, and based on the strength of your arguments, you seem to be in the same camp.  So be it, but history says it's money.  So do the central banks who have been net buyers of Gold for the last few years.  Dave... if Gold is a commodity, and the smart folks at (generally non-Western) central banks know this.. .why would they be buying so much?  Why do central banks want a "commodity" when they know better than anyone else the true underlying economic weakness that is occuring?  I would really like you to answer this question Dave... or you can ignore it.

According to the World Gold Council, gold buying by global central banks in 2012 was at the highest level that we have seen since 1964

Worldwide gold demand in 2012 was another record high of $236.4 billion in the World Gold Council’s latest report. This was up 6% in value terms in the fourth quarter to $66.2 billion, the highest fourth quarter on record. Global gold demand in the fourth quarter of 2012 was up 4% to 1,195.9 tonnes.
Central bank buying for 2012 rose by 17% over 2011 to some 534.6 tonnes. As far as central bank gold buying, this was the highest level since 1964. Central bank purchases stood at 145 tonnes in the fourth quarter. That is up 9% from the fourth quarter of 2011, and the eighth consecutive quarter in which central banks were net purchasers of gold.
This all comes on the heels of decades when global central banks were net sellers of gold.  Marcus Grubb, a Managing Director at the World Gold Council, says that we are witnessing a fundamental change in behavior by global central banks...

but the whole alternative financial/political media and commentators (i.e., not the mainstream types). I didn't mean to call out this site in particular; it just happens to be the one I am most active on because I tend to agree with the three E message.

I think my point though was not to attack PP but rather to observe that a lot of posters here and elsewhere are spinning the gold story like they know the truth and that truth is powerful manipulative forces. That is religion to me. 

I am sorry if this sounded like a passive-aggressive attack on this site; if you read my other posts, I believe I referred in general to the alternative media sites, of which I consider this one. I am not attacking the site per se, I am only attacking the seeming inability for many to consider possibilities other than the narratives confined to alternative financial sites.

I can go to the mainstream for their narrow analyses and I can go here for a different analysis. I am a bit disappointed only because I have always trusted this site for an honest and balanced dialogue and I don't feel as though I am seeing this now. 

All the best to this site and my apologies if I came off as attacking PP. I actually have a lot of respect for the message here.


Since you were very supportive of Davefairtex' interpretation of events (Deflation… Gold as a commodity), let me then ask you as well, why are central banks around the world buying so much Gold if it is a non-monetary commodity?  How do you interpret this behavior on their part?  What is the truth?   

If you are implying that I have said that an "all powerful" force is controlling every tick of gold's price, please copy and paste the relevant text so that I can see where I am miscommunicating.
As far as I know, I have not said any such thing, nor even implied as much.

What I did say was that central banks have a set of policies they are actively promoting and all the evidence suggests that they either promote or 'allow' whatever works towards those policies.

A perfect case in point is the LIBOR scandal where it's pretty obvious that the Fed and US Treasury knew about the whole thing but did nothing because a lower LIBOR rate served their interest.  This was a massive conspiracy involving multiple large banks because to manipulate LIBOR you need the center four banks in the daily LIBOR range to all be in on it at a minimum. More likely, you need all the banks in on it because of how the rate is set.

What I tried to lay out was the set of dots that connect the bullion banks to market manipulating behaviors. That their motivation is making money is without a doubt.  That the CFTC and SEC and Fed, et al., will not investigate them for any overt market distorting practices is a belief I hold because, and only because, the usual direction of their market manipulation serves to drive down the price of PMs and create uncertainty and doubt over the safe haven status of PMs.

The corollary to this is that if they suddenly went the other direction, and began bull raiding the same markets, causing massive upwards volatility that suddenly the CFTC and SEC would be all over the situation in a skinny minute.

While I cannot prove these ideas with any scientific rigor, they are based on a lot of very direct observation and are pretty solidly locked in my mind as in the 90% probability range of being correct.

How does any of this help us?  Well, for starters I am a big believer in the idea that market distorting practices cannot win out against underlying fundamentals forever.  Whatever collusion and complicity underlies the market structure for PMs, and there's plenty of evidence to support the idea that there is lots of both, is merely building up pressure for the final blow off.

When that moment comes, it will be important to know why the blow off is particularly severe so that we can keep our bearings and know the what's the when's and the why's of exiting the PM trade and rotating into the next place that the wealth transfer cycle is aiming at.

I wish that I could just connect dots based on direct, observable data, but that luxury escapes us all.  There is much in our official statistics that is Fuzzy, distorted, and not really helpful except perhaps directionally.  Worse, there is much that is just outright fabrications and lies.

My personal position is that I trust myself as an experienced observer and dot connector.  I really do, and I don't know any other way to proceed in this world of smoke and mirrors.  For example, the Fukushima disaster was another moment where I took what little evidence existed, almost completely ignored the statements by Japanese officials, and went with the most likely scenarios that fit the information we had.

As it turned out, our assessment of the severity and damage made within the first few days of that accident were entirely confirmed, officially, more than a year after the fact.

For the article above, I am took my direct observations of the gold market and trading irregularities to make the case the the bullion banks pulled another fast one.  After reading more points of view, scouring the additional data, I stand completely by that view.  Of course, feel free to disagree, or not, either way trust yourself.


Thanks Chris for an explanation of the gold slam.
My take is similar to Davefairtex;  while certainly big players take advantage of situations and have unfair advantages against us little guys it's just not useful for us to believe in an all-powerful market controller.

My last post was meant to ask, who are the central banks trying to fool if they are manipulating gold?  I'll most of the public doesn't pay attention, and the rest are too saavy to be fooled.

I did not mean at all that Chris was implying an all-powerful force; I think he has presented a rational analysis that is in contrast to the less substantiated material one may read at other websites.

by the Central Banks of the world.  What other "Commodity" have the Central Banks bought?  None that I know.  
If anyone has an answer to other commodities being bought by Central Banks, could you please bring it forth?  If you can't, the answer to the question "Is gold viewed as a commodity by the Central Banks?" has been answered.

And I agree Jim, I've watched a lot of disinformation being posted lately in order to get a specific agenda across.  Whether this is being done on purpose, or is just that persons stance, I have no idea.